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FTSE opens lower but Severn Trent up on unit sale

Written by: Staff
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LONDON,, April 4 (Reuters) Leading UK shares opened lower on Tuesday, unsettled by soft U.S. economic data, but utility Severn Trent jumped 7.7 percent after it announced a large disposal.

Britain's second-biggest listed water company said it planned to demerge its Biffa waste-disposal unit to focus on its core water business, and it flagged encouraging annual results driven by higher water bills. The action encouraged other utilities with Scottish&Southern Energy and Kelda both gaining more than 1 percent.

Talk of potential U.S. interest in insurance company Prudential lifted its shares 0.5 percent. The shares are sensitive to bid talk after the recent abortive negotiations with UK rival Aviva and the Financial Times identified American International Group as a potential suitor.

By 0724 GMT the FTSE 100 index was down 20.7 points to 6,003.6, giving back a big part of Monday's gain as Wall Street slithered off its day's highs after soft data raised questions about the strength of the U.S. economy.

Traders said shares were looking set for a period of consolidation after hefty gains in the first quarter and investors could use the looming Easter holidays as an excuse to sit back from the market.

''People are very reluctant to push this market much higher.

Easter's starting up next week, I think people are going to try and stay out of trouble. It will be difficult to find buyers,'' said a trader.

''The market is out of puff, it's had a very good first quarter.

Rising inflationary pressures, rising energy prices, a wobbly dollar are not exactly a recipe for getting people to reach for the cheque book,'' he added.

Among other early movers, cigarette company British American Tobacco rose 1.1 percent after dealers reported UBS raised its target price, while on the downside sugar and sweeteners firm Tate&Lyle fell 3.4 percent as consumer advocates said its Splenda sweetener could cause digestion problems.

REUTERS MP RS1742

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